Suppose the U.S. government imposes an ad valorem tariff on the import of vitamins. Which of the following would likely be a result of the tariff on the U.S. market?

Question

Quizplus · Accepted Answer

An ad valorem tariff on imports of vitamins would lead to an increase in the cost of imported vitamins for domestic consumers. As a result, the demand for vitamins would decrease, leading to a decrease in the total quantity of vitamins sold in the U.S. market. This is because the tariff would make imported vitamins relatively more expensive compared to domestically produced vitamins, and consumers would therefore choose to buy less of them. The other choices are not likely outcomes of an ad valorem tariff on vitamins.